$23 Million Award Against Attorney, Contractor Upheld by Cal. Court of Appeal

This month California's Second Appellate District, Division Two, Court of Appeal upheld an award of $21 million in punitive damages and $2.2 million in compensatory damages against building contractor Noam Bouzaglou, his corporation, Ness Adam, Inc. and attorney Andrew J. Stern. Defendants allegedly perpetrated a fraud against Kathleen and Tim McGinty, in order to obtain their modest family home in Santa Monica.

Kathleen is autistic. Her brother suffered throughout his life from bipolar disorder, depression and substance addiction, and was getting by on his small monthly disability payment. Joseph Girard, principal at LA Elder Law, represented Kathleen McGinty and Jeanne Haworth, the current trustee for the McGinty estate, in the original case decided in favor of the plaintiffs in 2014.

In 2006, Delores McGinty, Kathleen's mother, set up a special needs trust for Kathleen's benefit. The main asset of the trust was the 1,477 square foot single family home in Santa Monica, built by their father, a returning WWII veteran, for a few thousand dollars from a Sears Roebuck and Co. pre-cut home kit. Owned free and clear, the home was the residence for Delores and her daughter.

Son Tim became the trustee after the death of his mother Delores in 2009 and moved into the house with his sister the same year. In 2010 the City of Santa Monica "red-tagged" the detached garage of the home as dangerous and noncompliant with occupancy standards.

To fix the garage, as well as to update plumbing and wiring in the home, Tim, the original trustee, obtained a $75,000 loan against the property. From there, with Bouzaglou now engaged, costs ramped up, with more work proposed that was to include remodeling the main home, construction of a guest house and other contract add-ons. Cash was given to Bouzaglou, even as little work commenced on the property, and ultimately a $400,000 construction loan was procured, with more funds disbursed to Bouzaglou via his company, Ness Adams, Inc.

Bouzaglou allegedly directed Kathleen to sign a lease for an apartment in Encino and moved Tim and Kathleen out of their family home in 2012. After the move, Kathleen suffered from sleeplessness, depression and other problems, and her brother attempted suicide, resulting in hospitalization. Upon Tim's release from the hospital, Bouzaglou had Tim sign an agreement, prepared by attorney Stern, transferring the home to Bouzaglou, who soon moved into the home himself with his family before attempting to sell the property.

Tim died several months after his hospital release, at which time Jeanne Haworth became the trustee and stepped in to help Kathleen. She became aware of the egregious situation, finding that the family home was in escrow for $1.55 million. Working with Joe Girard, who had worked as her aunt's estate planning attorney, to file a lawsuit, the sale was stopped.

"If this sale had gone through, $1.55 million could have disappeared overnight," said Girard. "Once we got the real estate under control of the judge, Jeanne and Kathleen had more security."

The 2014 case, Haworth v. Bouzaglou (case no. BC495095), was decided after an eight-day trial in which Judge Stephen Czuleger ordered the contract for work on the home rescinded and the home returned to Jeanne Haworth, the trustee for Kathleen McGinty since the death of her brother. The jury found that contractor Bouzaglou had shown abusive conduct and had acted with recklessness, oppression and malice toward the McGinty family. Attorney Andrew Stern, working with Bouzaglou, was found professionally negligent and engaged in fraudulent conduct.

Editor's note: Most of the material in this article, submitted by Maria Fotopoulos of http://www.laelderlaw.com, i.e. the Plaintiff's attorneys. We have reached out to Noam Bouzaglou for comment.